People and Banks

The Romanian government headed by the Social Democrat Victor Ponta has recently taken measures designed to help increase living standards and boost investments and the economy.

Valentin Țigău, 27.06.2014, 13:27

In Thursday’s meeting, the government passed an emergency ordinance that amends the Fiscal Code, regulating loan deductions for individuals with incomes of up to 2,200 lei. Their monthly bank payments may be reduced to a half for two years, with the state undertaking to finance the additional interests. This facility is designed to increase the incomes available to bank clients, and thus to increase consumption, with positive effects on economic growth. PM Ponta said the measure is part of a series that also includes restoring salaries to the level before the peak of the economic crisis, and an increase of minimum wages to 205 euros as of July 1st.

For entrepreneurs, the PM mentioned the maintaining of the flat tax rate and the exemption from taxes on reinvested profits, while social security contributions paid by employers will be lowered by 5% starting October 1st. Seen as one of the most important measures of the past years, this reduction has already been passed by Senate and is very likely to be endorsed by the Chamber of Deputies as well, in order to support the business environment, to help create new jobs and possibly pay raises as well.

During the same cabinet meeting on Thursday, the dates of the two rounds of the presidential election were set on November the 2nd and 16th respectively. The Opposition claims these economic measures have been prompted by the forthcoming election, which the Social Democrats are the most likely to win, according to recent opinion polls. In their turn, trade unions doubt that these measures will result in an increase in living standards. With 2,500 people laid off by the railway corporation as of July 1st and with frequent protests in the public healthcare sector, the head of the National Trade Union Bloc Dumitru Costin says the reduction in social security payments will affect the social security budget. He says there are slim chances that two million jobs will surface from the informal economy thanks to this measure.